Question

Bethany opened a store credit card to purchase a TV for $589. She put the entire purchase on the credit card. Her APR is 29.99% and the minimum payment is 5%. Assuming she makes only minimum payments, what is the remaining balance on her card after 3 months?

Answer 1

Original debt = $589
APR = 29.99%
The monthly rate is 0.2999/12 = 0.02499

After 1 month:
Amount owed = 589*1.02499 = $603.72
5% payment = 0.05*603.72 = $30.187
New balance = $603.72 - 30.187 = $573.53

After 2 months:
Amount owed = 573.53*1.02499 = $587.87
5% payment = 0.05*587.87 = $29.39
New balance = 587.87 - 29.39 = $558.48

After 3 months:
Amount owed = 558.48*1.02499 = $572.44
5% payment = 0.05*572.44 = $28.62
New balance = 572.43 - 28.62 = $543.82

Answer: $543.82